ECON 1050 Chapter Notes - Chapter 8: Behavioral Economics, Utility, Economic Surplus

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apricotmoose352

3 Dec 2017

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Consumption choices - choices made by a buyer of goods and services. Limited to income and the prices of goods. Budget line - boundary between what is affordable and unaffordable. Points on or under this line is affordable. Points outside the this line are not affordable. Consumption possibilities change when income or prices change. Change in income shifts the budget line to the left/right. Change in prices (of two goods) changes the slope of the budget line. Utility - benefit or satisfaction a person gets from the consumption of goods and services. Total utility - total benefit that a person gets from the consumption of all the different goods and services. Marginal utility - change in total utility that results from a one-unit increase in the quantity of a good consumed. Positive marginal utility, the things that people enjoy and want tom have more of.

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1.	_____	The satisfaction or benefit that consumers receive from consuming goods or services.
2.	________________ _	A particular combination of specific quantities of goods or services
3.	________________ _	Consumers can rank all conceivable bundles of goods or services
4.	_____	If A is preferred to B, and B is preferred to C, then A is always preferred to C.
5.	_____	Equation showing a consumerâs perception of the total utility forthcoming from consuming each bundle of goods and services.
6.	_____	A set of consumption bundles each and every one of which provides a consumer with exactly the same level of total utility.
7.	_____	The number of units of Y that must be given up for total utility to remain the same when one more unit of X is consumed.
8.	_____	The addition to total utility attributable to consuming one more unit of a good, holding the consumption of all other goods constant.
9.	_____	The line showing all bundles of goods that can be purchased at given prices if the entire income is spent.
10.	_____	The change in the consumption of a good that would result if the consumer remained on the original indifference curve after the price of the good changes.
11.	_____	The change in consumption of goods results strictly from the change in purchasing power after the price of a good changes.
12.	________________ _	The sum of the substitution and income effects.
13.	_____	A good for which quantity demanded varies directly with price, causing an upward sloping demand curve.
14.	_____	A list of prices and the corresponding quantity consumers are willing and able to purchase at each price.

blushwildebeest943

n this assignment you will apply consumer choice theory and marginal analysis to business problems. Consider each of the following products and services: a pair of tickets to a sporting or cultural event that you enjoy a can of common table salt a college class In a two-page essay: Explain how your own current household budget, tastes and preferences, and future expectations determine how much of each of these products you purchase in a year. Describe the benefits (utility) you get from each product and service. Suppose the price of the tickets were cut in half. How would your consumption of cultural or sporting goods change? Why? Suppose your household budget was suddenly doubled because you received a 100% raise. How would your consumption of each of these goods and services change? Explain your answer in terms of utility and marginal analysis. What is the law of diminishing marginal utility? How does this law affect the ability of table salt companies to stimulate demand for their product?

In this assignment, you will apply consumer choice theory and marginal analysis to business problems.

Consider each of the following products and services:

a pair of tickets to a sporting or cultural event that you enjoy

a can of common table salt

a college class

In a two-page essay:

Explain how your own current household budget, tastes and preferences, and future expectations determine how much of each of these products you purchase in a year. Describe the benefits (utility) you get from each product and service.

Suppose the price of the tickets was cut in half. How would your consumption of cultural or sporting goods change? Why?

Suppose your household budget was suddenly doubled because you received a 100% raise. How would your consumption of each of these goods and services change? Explain your answer in terms of utility and marginal analysis.

What is the law of diminishing marginal utility? How does this law affect the ability of table salt companies to stimulate demand for their product?

orchidminnow140

ECON 1050 Chapter Notes - Chapter 8: Behavioral Economics, Utility, Economic Surplus

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